The ICA was the US government's first regulation on any industry. Passed as a law in 1887, it gave the authority to regulate monopolies over railroads. Before the ICA, the railroads were largely unregulated and business was largely in the hands of greedy monopolists.
The wording of the ICA was the precedent for the Sherman Antitrust Act of 1890 (three years later) which gave the government the power to intervene in what they saw inhibited the free trade of commerce.
Monopolies were destructive to commerce because they were a hindrance to the free-market and pro-competition values of a laissez faire market, which the United States promoted.
ICA Seal
In the late 19th and early 20th century, industry and business in the United States was growing like an invasive kudzu plant. Once the Japanese kudzu plant was introduced to the United States in 1876 it took over the native species and grew at an alarming rate. Like the kudzu, the monopolists in the Gilded age were quite uncontrollable. Jay Gould is a famous robber baron who built and empire of businesses over railroads. He was commonly disliked and remembered as being a master briber, inside stock trader, and recklessly greedy speculator. He was opposed to the ICA.
The Commerce Clause in the Constitution - The Commerce Clause gave the government the explicit power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes..."
Gibbons v. Ogden: John Marshall rules that regulation of commerce within states is not limited to state borders but also includes borders among waters and "interstate navigation". The power of the commerce clause reached could reach a more broad scope.
Railroad monopolies could set whatever prices they wanted to transport goods. They could discriminate against competitors. A system of rebates could be set in place in which companies who shipped product in bulk received better rates. Farmers who could not ship a large enough volume were hurt from these practices. Companies who were not part of a ring of coupon/rebates/agreements for shipments were out of luck in the presence of monopolists who had death grips on commerce over railroads.
The Standard Oil Company led by John D. Rockefeller played the railroad rebate game very viciously and got the system to work on their side. Rockefeller and his partner Flagler issued coupons and rebates for aggressive railroad agreements. Railroads shipped so much Rockefeller oil that they couldn't survive without them. These railroads were so dependent on Rockefeller's oil for business that as a part of their agreements they would pay back Rockefeller a rebate just to be able to ship their oil, because Rockefeller owned/bought out all the oil refineries in the region. The railroads had become trapped in a ploy that had them shipping oil almost against their will.
The Interstate Commerce Act called for "just and reasonable rates", prohibited special rates and rebates for specific companies (like the Standard Oil Scheme), prohibited discrimination of price depending on customer, prohibited the pooling of traffic or markets, and created an Interstate Commerce Commission, the ICC.
Related images:
Kudzu plant overtaking some ruins in Georgia. Quite beautiful and apocalyptic.
Political cartoon (date unknown) depicting Jay Gould's control over US communication lines
The Interstate Commerce Act
Quick facts to know:
In the late 19th and early 20th century, industry and business in the United States was growing like an invasive kudzu plant. Once the Japanese kudzu plant was introduced to the United States in 1876 it took over the native species and grew at an alarming rate. Like the kudzu, the monopolists in the Gilded age were quite uncontrollable. Jay Gould is a famous robber baron who built and empire of businesses over railroads. He was commonly disliked and remembered as being a master briber, inside stock trader, and recklessly greedy speculator. He was opposed to the ICA.
The Commerce Clause in the Constitution - The Commerce Clause gave the government the explicit power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes..."
Gibbons v. Ogden: John Marshall rules that regulation of commerce within states is not limited to state borders but also includes borders among waters and "interstate navigation". The power of the commerce clause reached could reach a more broad scope.
Railroad monopolies could set whatever prices they wanted to transport goods. They could discriminate against competitors. A system of rebates could be set in place in which companies who shipped product in bulk received better rates. Farmers who could not ship a large enough volume were hurt from these practices. Companies who were not part of a ring of coupon/rebates/agreements for shipments were out of luck in the presence of monopolists who had death grips on commerce over railroads.
The Standard Oil Company led by John D. Rockefeller played the railroad rebate game very viciously and got the system to work on their side. Rockefeller and his partner Flagler issued coupons and rebates for aggressive railroad agreements. Railroads shipped so much Rockefeller oil that they couldn't survive without them. These railroads were so dependent on Rockefeller's oil for business that as a part of their agreements they would pay back Rockefeller a rebate just to be able to ship their oil, because Rockefeller owned/bought out all the oil refineries in the region. The railroads had become trapped in a ploy that had them shipping oil almost against their will.
The Interstate Commerce Act called for "just and reasonable rates", prohibited special rates and rebates for specific companies (like the Standard Oil Scheme), prohibited discrimination of price depending on customer, prohibited the pooling of traffic or markets, and created an Interstate Commerce Commission, the ICC.
Related images: